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New Zealand shares have been on a roll, but a fund manager says the local market still isn't overvalued and could keep grinding higher as the year plays out.

Speaking after Nikko Asset Management's investment summit in Auckland yesterday, head of equities Stuart Williams said the S&P/NZX 50 could post an annual gain in "the high single digits".

The benchmark index closed at a record 6755.22 last night, having gained 6.8 per cent in the year to date and 13.8 per cent from the low it reached on February 12 amid the turmoil that enveloped markets during the opening weeks of 2016. It is currently trading at more than 18 times earnings, compared with a historical average of around 15 times.

"I don't see it as being overvalued," said Williams, whose firm manages assets worth more than $4 billion in New Zealand. "It's expensive versus its history."

But he said the market's history was made "somewhat irrelevant" by the low interest rate environment of recent years.

"You can't look at it and say it's expensive without contemplating that interest rates are one third of what they were when you had an OCR [official cash rate] of 6 per cent and home loan rates of 9 or 10 per cent," Williams said. "That's a completely different reference point, so I'd say the market valuation point is fine ... and within the market there are still opportunities."

Investors needed to be wary, however.

With a price-to-earnings multiple of around 6 times, Williams said Air New Zealand, for example, was one of the cheapest stocks on the market. But he said there was risk of intense competition eroding the airline's earnings base.

"Not a week goes by when there's not a new competitor announced," Williams said. "They've done an exceptionally good job of positioning themselves against that so maybe [Air New Zealand shares] are still cheap enough to invest in ... but we're cautious."

Meanwhile, he said Nikko had a positive view on the upcoming float of chicken producer Tegel, which will list on the Australian and New Zealand stock exchanges on May 3.

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"We've done quite a bit of work on it," Williams said. "It's a very good company, with a good demand profile. It's simply going to come down to price."

Tegel shares have been priced in an indicative range of $1.55 to $2.50, giving the company a market value of up to $636 million. The deal, which will raise up to $344.4 million, gives Tegel an indicative price-to-earnings multiple of 12.7 to 14.7 times. Final pricing will take place through a bookbuild on April 18 and 19.

WATCH: Stuart Williams discusses the market's strong run

Head of equities Stuart Williams says the S&P/NZX 50 could post an annual gain in "the high single digits".